Microvast Holdings, Inc.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
MVST$0.63+9.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001628280-26-033590
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001628280-26-055372
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 136 current paragraphs.
67 unchanged; 33 reworded; 28 added; 18 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
Going Concern
Current report
In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern, we evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. This evaluation initially does not consider the potential mitigating effect of management's plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans to the extent it is probable that 1) the plans will be effectively implemented within one year after the date the financial statements are issued, and 2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt. Given the uncertainties described in Note 1 to the unaudited consolidated financial statements of this Quarterly Report and in this Management's Discussion and Analysis of Financial Condition and Results of Operations, we have concluded that substantial doubt exists about our ability to continue as a going concern within one year after the date the financial statements are issued and that management's plans to alleviate the substantial doubt cannot be deemed probable, and thus the substantial doubt about our ability to continue as a going concern has not been alleviated.
Current report
Our revenues for the three months ended June 30, 2026 decreased by $4.1 million, or 4.5%, compared to the same period in 2025. The decrease was primarily driven by a $2.7 million tariff refund issued to a U.S. customer, which was recorded as a reduction to our revenue in the current period.
Current report
Our cost of revenues for the three months ended June 30, 2026 increased by $1.9 million, or 3.1%, compared to the same period in 2025, primarily driven by higher raw material prices during the first half year of 2026, partially offset by a one-time $4.3 million recognition of tariff refunds.
Current report
Our gross profit margin was 29.5% for the three months ended June 30, 2026 compared to 34.7% in 2025. The decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced fixed cost absorption, slightly offset by the one-time recognition of the tariff refunds.
Current report
General and administrative expenses for the three months ended June 30, 2026 increased by $2.7 million, or 24.2%, compared to the same period in 2025. This increase was primarily due to a $2.6 million increase in legal and other professional service fees.
Current report
Research and development expenses for the three months ended June 30, 2026 increased by $1.1 million, or 14.8%, compared to the same period in 2025. The increase was primarily due to an increase in labor costs as we expanded our investment in new product development.
Current report
Selling and marketing expenses for the three months ended June 30, 2026 increased by $1.3 million, or 38.5%, compared to the same period in 2025. This increase was primarily due to a $1.5 million increase in service fees associated with customer retention initiatives, partially offset by a decrease in personnel costs.
Current report
For the three months ended June 30, 2026, we recorded a loss of $5.8 million due to the change of the fair value of the Convertible Loan before it was settled on May 28, 2026, see Note 14 – Convertible Loan measured at fair value.
Current report
Provision for Income Taxes
Current report
Provision for income taxes for the three months ended June 30, 2026 was nil as compared to a provision of $220 thousand for the comparable prior year period. No provision for income taxes in the current quarter was mainly due to the absence of taxable income and changes in deferred tax balances resulted in no material income tax expense or benefit.
Current report
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
Current report
General and Administrative Expenses
Current report
Research and Development Expenses
Current report
Research and development expenses for the six months ended June 30, 2026 increased by $1.7 million, or 10.7%, compared to the same period in 2025. The increase was primarily due to a $1.4 million increase in labor costs as we expanded our investment in new product development.
Current report
Selling and Marketing Expenses
Current report
Selling and marketing expenses for the six months ended June 30, 2026 decreased by $138 thousand, which was stable compared to the same period in 2025.
Current report
Foreign Exchange (Loss) Gain
Current report
Provision for Income Taxes
Current report
Provision for income taxes for the six months ended June 30, 2026 was nil as compared to a provision of $220 thousand for the comparable prior year period. The Company did not general taxable income and there was no material deferred tax expenses or benefit in the first half year of 2026.
Current report
As of June 30, 2026 and through the issuance date of these financial statements, our forecast has been significantly
Current report
impacted by developments including: (1) the 28.8% decrease in revenue and the 24.3% reduction in sales volume from approximately 947.2 MWh to approximately 717.2 MWh, driven by evolving regulatory and geopolitical dynamics including in the Indian and Korean markets, a demand shift toward lower-cost products in India, and OEM platform ramp-up delays in Europe and APAC; (2) the decline in gross margin from 36.0% to 30.4% due to higher raw material prices and lower production utilization, and a moderation in global electric vehicle demand growth driven by the expiration of government incentive programs and shifting regulatory frameworks; (3) the change from $44.3 million of cash generated by operating activities in the prior-year period to $33.3 million used in operating activities, an unfavorable change of $77.6 million; (4) the concentration of near-term maturities, with $104.2 million of our $118.6 million of borrowings due within the next 12 months; and (5) constrained access to capital, including that equity market conditions and business performance have rendered equity funding unfavorable as a primary liquidity mechanism and that cash held by our Chinese and European subsidiaries cannot currently be repatriated to fund our U.S. operations due to foreign regulatory restrictions and adverse tax consequences. As a result, we expect to continue to incur operating losses and negative operating cash flows, further reducing liquidity and increasing reliance on external sources of capital. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.
Current report
Management is evaluating and pursuing several initiatives intended to improve the Company’s liquidity position, including:
Current report
•Implementing operating cost reduction initiatives and reducing or deferring certain discretionary capital expenditures;
Current report
•Negotiating extensions or restructurings of debt obligations within the Company’s China operating entities;
Current report
•Evaluating additional financing alternatives, including potential capital raising transactions and strategic opportunities.
Current report
We have evaluated whether the plans described above are sufficient to alleviate the substantial doubt about our ability to continue as a going concern. Under this evaluation, we assessed whether it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the conditions and events that raise substantial doubt. We have determined that, while the plans described above are intended to improve our liquidity position, certain elements of the plans have not been fully implemented and are dependent upon factors outside our control, and therefore cannot be deemed probable. As a result, substantial doubt about our ability to continue as a going concern has not been alleviated. There can be no assurance that we will be able to reduce operating expenses or generate the level of revenue necessary to achieve profitability and generate cash, refinance or extend our maturing borrowings, obtain any needed waivers or amendments from our lenders, or source additional financing on acceptable terms, if at all. Without additional sources of financing, our ability to continue as a going concern would be materially and adversely impacted, and we may be required to significantly reduce, restructure or, cease operations.
Current report
We secured $69.4 million in bank loans during the six months ended June 30, 2026 (see Note 6 - Bank Borrowings), of which $48.2 million represented refinanced debt. We anticipate that we will continue to be able to refinance the maturing short-term bank borrowing for the next twelve months. However, there can be no assurances that such refinancing or extension will be available on acceptable terms, or at all, and this refinancing plan cannot be deemed to be probable. As of June 30, 2026, we were in compliance with all material terms and covenants under our loan agreements, credit agreements, and bonds.
Removed paragraphs (18)
Previous report
Revenues
Previous report
Cost of Revenues and Gross Profit
Previous report
Operating Expenses
Previous report
Subsidy Income
Previous report
Revenues
Previous report
Cost of Revenues and Gross Profit
Previous report
Operating Expenses
Previous report
Research and development expenses for the three months ended March 31, 2026 increased by $0.6 million, or 6.8%, compared to the same period in 2025. The increase in R&D expenses was primarily due to the expansion of our domestic R&D presence in the U.S.
Previous report
Selling and marketing expenses for the three months ended March 31, 2026 decreased by $1.5 million, or 21.4%, compared to the same period in 2025. This reduction in S&M expenses was primarily due to $1.3 million of decreased service fees.
Previous report
Subsidy Income
Previous report
Management has implemented several primary plans intended to alleviate these conditions:
Previous report
•Operating Cash Flow: For the three months ended March 31, 2026, the Company had a loss from operations of $7.9 million and used $22.8 million in operating activities. We have an order backlog of $168.7 million with the majority of these orders expected to be fulfilled in 2026 and 2027. We do not expect significant fluctuations in gross margin, considering our selling prices are secured by the contract backlogs and current market conditions of major raw materials. Under the current operating plan, we believe that the net operating cash flow in the forecasted period will be positive.
Previous report
•Equity Funding: Under our Controlled Equity Offering Sales Agreement (the “Sales Agreement”), the Company has received $27.7 million in net proceeds through the date of this issuance. We intend to continue utilizing the Sales Agreement to raise additional capital as needed for general corporate purposes and debt repayment.
Previous report
•Prioritization of Capital Expenditures: While remaining poised to increase investment in ESS in the future, the Company has shifted its focus to allocate capital toward more immediate and profitable commercial vehicle applications. By deferring ESS development and focusing on near term cash-generative opportunities, we believe a more effective liquidity position can be maintained over the next twelve months.
Previous report
Based on execution of these plans, management has concluded it is probable that these actions will alleviate substantial doubt about the Company’s ability to continue as a going concern and provide adequate liquidity to meet our requirements for the next twelve months. However, there is no assurance that the Company will be able to alleviate these concerns.
Previous report
We secured $51.7 million in bank loans during the three months ended March 31, 2026 (see Note 6 - Bank Borrowings). The Company has been exploring a potential sale of its Lake Mary, Florida facility with a prospective buyer for a gross purchase price of $11.5 million. This divestiture is intended to provide additional liquidity without impacting core operations. The transaction is subject to customary closing conditions and a due diligence period for the buyer. The Company currently anticipates that the transaction will close during the second quarter of 2026.
Previous report
•Convertible Loan measured at fair value of $76.5 million. This loan bears interest rate at Term SOFR plus an initial applicable margin of 9.75% per annum, 3.75% is paid in kind and added to the outstanding principal balance, and the remainder is paid in cash. The loan matures on May 28, 2026. We currently expect Mr. Wu to convert the Convertible Loan into outstanding shares of common stock as provided for in the Loan Agreement. If he does not elect to convert, we anticipate requesting a further extension of the maturity date. There can be no assurance Mr. Wu will agree to such extension. See Note 14 - Convertible loan measured at fair value for details.
Previous report
The exercise price for our outstanding warrants is $11.50 per share of common stock, and the trading price of our common stock was $1.87 as of May 4, 2026. There is no guarantee that the warrants will be exercised prior to their expiration, however, we do not expect this to impact our liquidity.
Reworded paragraphs (33)
Previous wording
References in this Report to the “Company,” “Microvast Holdings, Inc.,” “Microvast,” “our,” “us” or “we” refer to Microvast Holdings, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the interim consolidated financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Current wording
References in this Report to the “Company,” “Microvast Holdings, Inc.,” “Microvast,” “our,” “us” or “we” refer to Microvast Holdings, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the interim consolidated financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. See the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, Item 1A of this Quarterly Report for further discussion of the risks and uncertainties that could affect our business, financial condition and results of operations.
Previous wording
Founded in 2006 and headquartered in Stafford, Texas, Microvast Holdings, Inc. (NASDAQ: MVST) is a global leader in advanced specialized battery technologies. Since our public listing in 2021, we have focused on delivering high-performance lithium-ion battery solutions for the next generation of commercial and industrial electrification. We specialize in the design, development, and manufacturing of battery components and systems primarily for electric commercial vehicles and energy storage systems (“ESS”). We have recently shifted our commercial priorities and resources towards certain new and upcoming commercial vehicle opportunities while remaining poised to increase activity in ESS in the future. Our guiding principle is to innovate lithium-ion battery designs from the ground up without relying on legacy technologies. We believe that this approach allows us to create purpose-built solutions for new markets, rather than repurposing existing ones.
Current wording
Founded in 2006 and headquartered in Houston, Texas, Microvast Holdings, Inc. (NASDAQ: MVST) strives to be a global leader in advanced specialized battery technologies. Since our public listing in 2021, we have focused on delivering high-performance lithium-ion battery solutions for the next generation of commercial and industrial electrification. We specialize in the design, development, and manufacturing of battery components and systems primarily for electric commercial vehicles and energy storage systems (“ESS”). We have recently aligned our commercial priorities and resources to focus on selected near-term opportunities in the commercial vehicle market, while continuing to evaluate future opportunities in the ESS market. Our guiding principle is to innovate lithium-ion battery designs from the ground up without relying on legacy technologies. We believe that this approach allows us to create purpose-built solutions for new markets, rather than repurposing existing ones.
Previous wording
To support our product portfolio, we are building a second 2 GWh production line (Phase 3.2) at our Huzhou, China facility. While this new Phase 3.2 line is primarily configured for the manufacturing of our next-generation 120Ah high-energy cells, it has been designed with flexible tooling and process architecture to accommodate multiple cell formats, including the 53.5Ah, 48Ah, and 55Ah variants. The clean rooms and utility equipment installation have been completed for Phase 3.2. Installation of the production equipment is completed, with commissioning and pilot production underway. This investment enhances our agile manufacturing capability and reinforces our commitment to delivering high- performance solutions across diverse application scenarios. Additionally, we have pilot lines utilized for prototyping and testing and our Germany facility produces VDA modules.
Current wording
To support our product portfolio, we are building a second 2 GWh production line (Phase 3.2) at our Huzhou, China facility. The new Phase 3.2 line has been designed with flexible tooling and process architecture to accommodate multiple cell formats, including the 48Ah, 53.5Ah, 55Ah, and 120Ah variants. Installation and commissioning of the production equipment have been completed, and we anticipate continued capacity ramp-up during the second half of 2026. We believe this investment enhances our agile manufacturing capability and reinforces our commitment to delivering high-performance solutions across diverse application scenarios. Additionally, we have pilot lines utilized for prototyping and testing. Our Germany facility produces VDA modules.
Previous wording
The battery industry is subject to stringent and evolving environmental regulations, particularly concerning hazardous waste management, pollution control, and sustainability requirements. Over time, these regulations have become increasingly strict, impacting both product costs and gross margins. In the U.S., newly proposed RCRA universal waste regulations for lithium batteries are expected to be finalized by the EPA as early as August 2027, which would create a new waste category specifically for lithium batteries and establish new requirements for transportation, handling, and storage. Compliance with these standards requires continuous investment in manufacturing processes, material sourcing, and waste disposal practices to ensure adherence to environmental mandates across multiple jurisdictions.
Current wording
The battery industry is subject to stringent and evolving environmental regulations, particularly concerning hazardous waste management, pollution control, and sustainability requirements. Over time, these regulations have become increasingly strict, impacting both product costs and gross margins. In the U.S., newly proposed RCRA universal waste regulations for lithium batteries are expected to be finalized by the EPA as early as August 2027, which would create a new waste category specifically for lithium batteries and establish new requirements for transportation, handling, and storage.
Previous wording
As a global company with operations and sales in China, the Asia-Pacific region, Europe, and the U.S., we are also exposed to trade policies, tariffs, and regulatory shifts that could impact our ability to meet projected sales and maintain profit margins. Any significant changes in international trade agreements, supply chain restrictions, or geopolitical tensions may influence production costs, material sourcing, and cross-border sales strategies. Changes in tariff policy in particular, whether threatened or implemented, may raise costs for consumers which could lead to softened consumer demand. In addition, because our manufacturing center is located in China, ongoing trade developments between the United States and China, such as import and export controls, may complicate our ability to rely on those manufacturing centers for continued production. Navigating these regulatory complexities is essential to sustaining our competitive position and long-term growth trajectory.
Current wording
As a global company with operations and sales in China, the Asia-Pacific region, Europe, and the U.S., we are also exposed to trade policies, tariffs, and regulatory shifts that could impact our ability to meet projected sales and maintain profit margins. Any significant changes in international trade agreements, supply chain restrictions, or geopolitical tensions may influence production costs, material sourcing, and cross-border sales strategies. Changes in tariff policy in particular, whether threatened or implemented, may raise costs for consumers which could lead to softened consumer demand. For example, on July 23, 2026, the current presidential administration of the United States announced the imposition of 10% - 12.5% tariffs on imports from sixty economies under Section 301 of the Trade Act of 1974. The current situation with respect to tariff policy is dynamic, and the ultimate effect will be dependent on the magnitude and duration of the tariffs, the outcome of litigation, and the countries implicated, as well as our ability to mitigate their impact.
Previous wording
We derive revenue from the sales of our electric battery products and components to the commercial vehicle market. While historically concentrated in the Asia-Pacific region, our revenue mix has shifted significantly toward Europe which accounted for the largest portion of our revenue mix for both 2026 and 2025. This shift reflects our strategy to capture higher-margin opportunities in the European commercial vehicle sectors.
Current wording
We derive revenue from the sales of our electric battery products and components to the commercial vehicle market. While historically concentrated in the Asia-Pacific region, our revenue mix has shifted significantly toward Europe which accounted for the largest portion of our revenue mix for the six months ended June 30, 2026 and 2025. This shift reflects our strategy to capture higher-margin opportunities in the European commercial vehicle sectors.
Previous wording
The following table sets forth a breakdown of our revenue by major geographic regions, based on the locations of our customers, for the periods indicated (in thousands, except percentages):
Current wording
We issued $2.7 million tariff refunds to U.S. customers in May 2026. Before the tariff refunds were recorded as a reduction to our revenue in the current period, a total of $931 thousand and $1.2 million in revenue was realized in the United States for the three months and six months ended June 30, 2026, respectively. The following table sets forth a breakdown of our net revenue by major geographic regions, based on the locations of our customers, for the periods indicated (in thousands, except percentages):
Previous wording
We have historically received a significant portion of our revenue in a given reporting period from a limited number of key customers, which vary from period to period. The following table summarizes net revenues from the two largest customers that each accounted for over 10% of our net revenues for the periods indicated:
Current wording
We have historically received a significant portion of our revenue in a given reporting period from a limited number of key customers, which vary from period to period. The following table summarizes net revenues from the three largest customers that each accounted for over 10% of our net revenues for the periods indicated:
Previous wording
Our revenues for the three months ended March 31, 2026 were materially concentrated with a small number of customers. The composition of our largest customers has historically varied from period to period, and the level of revenue concentration with any individual customer has fluctuated, in some cases significantly, between reporting periods.
Current wording
Our revenues for the three and six months ended June 30, 2026 were materially concentrated with a small number of customers. The composition of our largest customers has historically varied from period to period, and the level of revenue concentration with any individual customer has fluctuated, in some cases significantly, between reporting periods.
Previous wording
Selling and Marketing Expenses. S&M expenses include personnel-related costs for our sales and marketing teams, including salaries, share-based compensation, and commission-based incentives. These expenses also cover advertising, promotional activities, and customer engagement efforts to drive product awareness and sales growth. As we continue to expand, we plan to hire additional sales personnel, enhance marketing programs, and strengthen customer relationships. Consequently, S&M expenses are expected to increase in absolute dollar terms over the long term.
Current wording
Selling and Marketing Expenses. S&M expenses include personnel-related costs for our sales and marketing teams, including salaries, share-based compensation, and commission-based incentives. These expenses also cover advertising, promotional activities, and customer engagement efforts to drive product awareness and sales growth.
Previous wording
Other income and expenses consist primarily of fair value changes of the warrant liability and convertible loan, these instruments are highly sensitive to fluctuations in our stock price. This section also includes interest expense associated with our debt financing arrangements, interest income earned on our cash balances, and foreign currency gains and losses.
Current wording
Other income and expenses consist primarily of fair value changes of the warrant liability and the convertible loan described in Note 14 to the Financial Statements included herein (the "Convertible Loan"), these instruments are highly sensitive to fluctuations in our stock price. This section also includes interest expense associated with our debt financing arrangements, interest income earned on our cash balances, and foreign currency gains and losses.
Previous wording
During the three months ended March 31, 2026, the Company observed a moderation in global electric vehicle demand growth, primarily driven by the expiration of government incentive programs and shifting regulatory frameworks in key regions. Our revenue and delivery schedules were also impacted by broader macroeconomic headwinds, including geopolitical instability and evolving tariff structures, which contributed to market volatility and have influenced customer procurement cycles.
Current wording
During the three months ended June 30, 2026, the Company observed a moderation in global electric vehicle demand growth, primarily driven by the expiration of government incentive programs and shifting regulatory frameworks in key regions. Our revenue and delivery schedules were also impacted by broader macroeconomic headwinds, including geopolitical instability and evolving tariff structures, which contributed to market volatility and influenced customer procurement cycles.
Previous wording
Our gross margin profile remains subject to external pressures, including inflationary trends in raw material pricing and elevated logistics and freight expenses resulting from ongoing global supply chain disruptions and geopolitical conflicts. The implementation of new tariff frameworks has increased the cost of goods sold. While we continue to implement cost-mitigation strategies, these macroeconomic factors, combined with a phase-out of regional subsidies for electric vehicle adoption, have contributed to a challenging environment for near-term profitability across the battery manufacturing sector.
Current wording
Our gross margin profile remains subject to external pressures, including inflationary trends in raw material pricing, duties and tariffs, and elevated logistics and freight expenses resulting from ongoing global supply chain disruptions and geopolitical conflicts. While we continue to implement cost-mitigation strategies, these macroeconomic factors, combined with a phase-out of regional subsidies for electric vehicle adoption, have contributed to a challenging environment for near-term profitability across the battery manufacturing sector.
Previous wording
Subsidy income decreased from $1.4 million for the three months ended March 31, 2025 to $3 thousand in the current-year period. The amounts are the one-time awards granted by the Chinese government in 2025 and 2026.
Current wording
Subsidy income decreased from $995 thousand for the three months ended June 30, 2025 to $15 thousand in the current-year period. The amounts are the one-time awards granted by the Chinese government in 2025 and 2026.
Previous wording
Foreign exchange gain decreased from $3.7 million for the three months ended March 31, 2025 to a loss of $6.9 million for the three months ended March 31, 2026. The foreign exchange loss for the three months ended March 31, 2026 was primarily due to unfavorable changes in the U.S. dollar and Euro exchange rates relative to the changes in RMB exchange rates.
Current wording
Foreign exchange gain decreased from a gain of $7.2 million for the three months ended June 30, 2025 to a loss of $4.7 million for the three months ended June 30, 2026. The foreign exchange loss for the three months ended June 30, 2026 was primarily due to unfavorable changes in the U.S. dollar and Euro exchange rates relative to the changes in RMB exchange rates.
Previous wording
Our revenues for the three months ended March 31, 2026 decreased by $55.9 million, or 48.0%, compared to the same period in 2025. The decrease was primarily driven by a 48.9% reduction in sales volume from approximately 535.7 MWh for the three months ended March 31, 2025 to approximately 273.9 MWh for the same period in 2026.
Current wording
Our revenues for the six months ended June 30, 2026 decreased by $60.0 million, or 28.8%, compared to the same period in 2025. The decrease was primarily driven by a 24.3% reduction in sales volume from approximately 947.2 MWh for the six months ended June 30, 2025 to approximately 717.2 MWh for the same period in 2026, and a $2.7 million tariff refund issued to a U.S. customer recorded as a reduction to our revenue in the current period.
Previous wording
Our cost of revenues for the three months ended March 31, 2026 decreased by $32.0 million, or 43.6%, compared to the same period in 2025, primarily due to the decrease in sales volumes.
Current wording
Our cost of revenues for the six months ended June 30, 2026 decreased by $30.2 million, or 22.7%, compared to the same period in 2025, primarily due to the decrease in sales volumes and the one-time $4.3 million recognition of tariff refunds which is partially offset by higher raw material prices.
Previous wording
Our gross profit margin was 31.6% for the three months ended March 31, 2026 compared to 36.9% in 2025. The decrease in gross margin was primarily due to lower production utilization, which reduced fixed cost absorption.
Current wording
Our gross profit margin was 30.4% for the six months ended June 30, 2026 compared to 36.0% in 2025. The decrease in gross margin was primarily due to higher raw material prices, and lower production utilization, which reduced fixed cost absorption, slightly offset by recognition of the tariff refunds.
Previous wording
General and administrative expenses for the three months ended March 31, 2026 decreased by $1.2 million, or 8.3%, compared to the same period in 2025. This reduction in G&A expenses was primarily due to $2.2 million decrease of allowance for credit loss due to improved credit management and a $1.0 million decrease of employee cost which was partially offset by a $1.5 million increase in professional service fees.
Current wording
General and administrative expenses for the six months ended June 30, 2026 increased by $1.5 million, or 6.0%, compared to the same period in 2025. This increase was primarily due to a $4.0 million increase in legal and other professional service fees, partially offset by a $3.1 million decrease in allowance for credit loss due to improved credit management.
Previous wording
For the three months ended March 31, 2026, we recorded a gain of $63.8 million. The gain was primarily driven by the decrease in the Company's stock price over the remeasurement period. For further discussion regarding the valuation methodology and inputs, see Note 14 – Convertible Loan measured at fair value.
Current wording
For the six months ended June 30, 2026, we recorded a gain of $58.0 million. The gain was primarily due to the change of the fair value of the Convertible Loan before it was settled on May 28, 2026, see Note 14 – Convertible Loan measured at fair value.
Previous wording
Since inception, we have financed our operations primarily from capital contributions from equity holders, the issuance of convertible notes and bank borrowings. As of March 31, 2026, our principal sources of liquidity were our cash and cash equivalents and restricted cash totaling $174.0 million, of which $126.1 million was comprised of cash and cash equivalents.
Current wording
Since inception, we have financed our operations primarily from capital contributions from equity holders, the issuance of convertible notes and bank borrowings. As of June 30, 2026, our principal sources of liquidity were our cash and cash equivalents and restricted cash totaling $143.1 million, of which $127.8 million was comprised of cash and cash equivalents.
Previous wording
Of the cash and cash equivalents as of March 31, 2026, $52.5 million is held by our Chinese subsidiaries and $18.8 million is held by our European subsidiaries. These funds are generally intended to support local operations. If we were to repatriate these funds to the U.S., we may be required to accrue and pay withholding taxes. We currently intend to retain available funds and any future earnings to support ongoing operation and expansion efforts in China, Europe and the U.S.
Current wording
Of the cash and cash equivalents as of June 30, 2026, $39.7 million is held by our Chinese subsidiaries and $23.5 million is held by our European subsidiaries. These funds are generally intended to support local operations. If we were to repatriate these funds to the U.S., we may be required to accrue and pay withholding taxes. We currently intend to retain available funds and any future earnings to support ongoing operation and expansion efforts in China, Europe and the U.S.
Previous wording
Management evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern within one year after the date of the consolidated financial statements are issued. Based on our current business plan, we projected that the existing cash and assets held for sale would not be sufficient to fund our operations through the next twelve months. These conditions and events raise substantial doubt about our ability to continue as a going concern.
Current wording
We evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the consolidated financial statements are issued. Based on our revised business plan, our projected cash flow may not be sufficient to fund operations and meet debt obligations over the next twelve months. Additionally, recent equity market conditions and business performance have rendered our equity funding unfavorable as a primary liquidity mechanism. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern.
Previous wording
•Refinancing of Short-Term Bank Borrowings: Based on our historical ability to access credit, we expect to maintain the ability to refinance these obligations as needed as they become due over the next twelve months. During the three months ended March 31, 2026, the Company refinanced $30.1 million.
Current wording
•Pursuing refinancing of short-term bank borrowings as they mature; and
Previous wording
•Bank borrowings of $138.8 million, the terms of which range from 0.2 to 24 months. The interest rates on our bank borrowings ranged from 2.40% to 4.85% per annum.
Current wording
•Bank borrowings of $118.6 million, the terms range from 2 to 21 months. The interest rates on our bank borrowings ranged from 2.40% to 4.85% per annum.
Previous wording
•Convertible bonds outstanding of $41.7 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027.
Current wording
•Bonds payable outstanding of $41.7 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027.
Previous wording
As of March 31, 2026, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds.
Current wording
As of June 30, 2026, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds. However, as discussed in Note 1 - Background and Basis of Presentation, this compliance does not alleviate the substantial doubt about our ability to continue as a going concern. Future non-compliance with financial covenants may limit our access to existing credit facilities or result in an acceleration of debt obligations, which would further adversely impact liquidity.
Previous wording
Our capital expenditures amounted to $4.2 million and $6.6 million for the three months ended March 31, 2026 and 2025, respectively. Our capital expenditures for the periods were primarily related to our Huzhou facility expansion, which is funded primarily by localized borrowings and cash flow from our China operations.
Current wording
Our capital expenditures amounted to $15.5 million and $14.0 million for the six months ended June 30, 2026 and 2025, respectively. Our capital expenditures for the periods were primarily related to (i) the purchase of our office building in the U.S., primarily funded by the proceeds from the sale of our held for sale assets and (ii) our Huzhou facility expansion, primarily funded by localized borrowings and cash flow from our China operations.
Previous wording
We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of March 31, 2026, such purchase commitments, which do not qualify for recognition on our consolidated balance sheets, amount to $29.1 million, most of which is short-term.
Current wording
We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of June 30, 2026, such purchase commitments, which do not qualify for recognition on our consolidated balance sheets, amount to $37.5 million, most of which is short-term.
Previous wording
There have not been any other material changes during the three months ended March 31, 2026 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Current wording
There have not been any other material changes during the three and six months ended June 30, 2026 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Previous wording
Net cash used in our operating activities was $22.8 million for the three months ended March 31, 2026, a decrease of $30.0 million compared to $7.2 million generated by operating activities in the same period in 2025. This decrease was primarily due to a $36.6 million reduction in net income after adjusting for non-cash items, which was partially offset by a net $6.6 million improvement in net operating assets and liabilities. The improvement in our net operating assets and liabilities was primarily due to a decrease in accounts receivables, partially offset by a decrease of accounts and notes payables, accrued expense and other liabilities and an increase in the inventories balance.
Current wording
Net cash used in our operating activities was $33.3 million for the six months ended June 30, 2026, a decrease of $77.6 million compared to $44.3 million generated by operating activities in the same period in 2025. This change was primarily due to a $60.6 million reduction in net income after adjusting for non-cash items and a $17.0 million net change in operating assets and liabilities. The changes in our operating assets and liabilities were primarily driven by the decreases in notes payable and an increase in inventory balances, partially offset by a decrease in accounts receivable due to improved credit management.
Previous wording
Net cash used in investing activities was $2.8 million for the three months ended March 31, 2026, compared to $2.3 million in the same period of 2025. This cash outflow primarily consisted of capital expenditures related to the expansion of our Phase 3.2 manufacturing facility and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities.
Current wording
Net cash used in investing activities was $3.3 million for the six months ended June 30, 2026, compared to $5.1 million in the same period of 2025. This cash outflow primarily consisted of the purchase of our office building in the U.S. and capital expenditures related to the expansion of our Huzhou Phase 3.2 manufacturing facility, partially offset by the proceeds from the sale of our held for sale assets.
Previous wording
Net cash generated by financing activities was $29.3 million for the three months ended March 31, 2026, an increase of $19.8 million compared to $9.5 million in the same period of 2025. The increase was primarily due to a $23.5 million increase in proceeds from bank borrowings and partially offset by a $7.7 million increase in repayments of bank borrowings.
Current wording
Net cash generated by financing activities was $8.2 million for the six months ended June 30, 2026, an increase of $15.0 million compared to $6.8 million used in the same period of 2025. The increase was primarily due to a $9.8 million increase in proceeds from bank borrowings, $7.4 million decrease in deferred payment related to the purchases of property, plant and equipment as majority of them were settled during the first quarter of 2026, partially offset by a $4.6 million increase in repayments of bank borrowings.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Compliance with these standards requires continuous investment in manufacturing processes, material sourcing, and waste disposal practices to ensure adherence to environmental mandates across multiple jurisdictions.
Current report — wording carried from elsewhere
In addition, because our manufacturing center is located in China, ongoing trade developments between the United States and China, such as import and export controls, may complicate our ability to rely on those manufacturing centers for continued production. Navigating these regulatory complexities is essential to sustaining our competitive position and long-term growth trajectory.
Current report — wording carried from elsewhere
Changes in Fair Value of Convertible Loan
Current report — wording carried from elsewhere
The following table sets forth our historical operating results for the periods indicated (in thousands, except percentages):
Current report — wording carried from elsewhere
During the six months ended June 30, 2026, the Company observed a moderation in global electric vehicle demand growth, primarily driven by the expiration of government incentive programs and shifting regulatory frameworks in key regions. Our revenue and delivery schedules were also impacted by broader macroeconomic headwinds, including geopolitical instability and evolving tariff structures, which contributed to market volatility and influenced customer procurement cycles.
Current report — wording carried from elsewhere
Our gross margin profile remains subject to external pressures, including inflationary trends in raw material pricing, duties and tariffs, and elevated logistics and freight expenses resulting from ongoing global supply chain disruptions and geopolitical conflicts. While we continue to implement cost-mitigation strategies, these macroeconomic factors, combined with a phase-out of regional subsidies for electric vehicle adoption, have contributed to a challenging environment for near-term profitability across the battery manufacturing sector.
Current report — wording carried from elsewhere
Subsidy income decreased from $2.4 million for the six months ended June 30, 2025 to $18 thousand in the current-year period. The amounts are the one-time awards granted by the Chinese government in 2025 and 2026.
Current report — wording carried from elsewhere
Foreign exchange gain decreased from $10.9 million for the six months ended June 30, 2025 to a loss of $11.6 million for the six months ended June 30, 2026. The foreign exchange loss for the six months ended June 30, 2026 was primarily due to unfavorable changes in the U.S. dollar and Euro exchange rates relative to the changes in RMB exchange rates.